FTC Launches Antitrust Probe into Microsoft's Cloud and AI Dominance

The US Federal Trade Commission has launched a sweeping antitrust investigation into Microsoft's cloud and AI operations, sending civil investigative demands to at least half a dozen competitors as regulators examine whether the tech giant has illegally leveraged its market dominance in enterprise technology.

FTC Demands Detailed Information from Competitors

The FTC's inquiry focuses on Microsoft's licensing practices and whether the company makes it difficult or more expensive for customers to run its software on third-party cloud platforms. The investigation also extends to Microsoft's AI operations, including model training costs, datacenter operations, and licensing practices.

According to reports, the civil investigative demands require competitors to provide detailed information about:

• Microsoft's licensing terms and conditions
• Training costs for AI models
• Business practices in cloud services
• Security and identity software operations
• Market impact of Microsoft's enterprise software offerings

Global Regulatory Scrutiny Intensifies

The FTC's probe comes amid growing international concern about Microsoft's market position. The UK Competition and Markets Authority concluded its investigation into the cloud services market last summer, recommending that the CMA consider designating Microsoft and Amazon Web Services (AWS) as having Strategic Market Status (SMS) in relation to their cloud services activities.

The European Union is also examining whether Microsoft is abusing its dominant position in traditional on-premises software as more enterprise customers shift workloads to the cloud. Google filed a complaint with the European Commission's antitrust authorities in September 2024, alleging anti-competitive practices.

Historical Parallels to Microsoft's Browser Wars

The current investigation bears striking similarities to Microsoft's long-running battle with the US Department of Justice in the 1990s over its desktop operating system monopoly. That case centered on whether Microsoft used its Windows dominance to suppress browser rivals, ultimately resulting in a consent decree with specific conditions to prevent a corporate breakup.

Industry analysts note that the current probe could have similarly far-reaching implications for Microsoft's business practices and market structure in cloud computing and AI services.

Impact on Enterprise Customers

Microsoft's licensing practices have been a point of contention for years. AWS has claimed that 50% of Azure workloads would migrate to other platforms if licensing costs allowed. The FTC's investigation may finally address these longstanding complaints about Microsoft's licensing terms that allegedly lock customers into its ecosystem.

Broader Tech Industry Implications

The FTC's aggressive stance toward Microsoft reflects a broader regulatory push against Big Tech dominance. The commission's chairman, Andrew Ferguson, recently sent a letter to Apple CEO Tim Cook regarding concerns about Apple News's content curation practices, warning that ideological bias in news aggregation could violate the FTC Act.

This multi-pronged regulatory approach signals a new era of scrutiny for major technology companies, particularly those with significant market share in critical infrastructure like cloud computing and AI services.

What This Means for the Cloud Market

The outcome of this investigation could reshape the competitive landscape in cloud computing. If regulators find that Microsoft has been engaging in anti-competitive practices, it could lead to:

• Changes in licensing terms and pricing
• Increased interoperability requirements
• Potential divestitures or structural changes
• New regulations governing cloud service providers

For enterprise customers, the investigation could eventually lead to more choices and potentially lower costs for cloud services. However, the process is likely to be lengthy, with significant legal and business implications for Microsoft and the broader tech industry.

The FTC's probe represents one of the most significant regulatory challenges to Microsoft's business model in decades, potentially forcing the company to alter practices that have been central to its cloud and AI growth strategy.